REOC San Antonio
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Kim_Gatley
Kim Gatley
S
enior Vice President & Director of Research at REOC San Antonio

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San Antonio medical market remains resilient

3Q09_MedicalSnap_BlogThe San Antonio medical market has shown remarkable resilience through the recent economic downturn but it is not without vulnerabilities.  The University of Texas School of Medicine recently completed the construction of the Medical Arts & Research Center, also known as the MARC (286,000 sf), located in the South Texas Medical Center.  This growth is positive for UT and the greater Healthcare industry but it will have a negative impact on the competitive medical market.    As a UT facility, the building is not included in the tracked set of medical properties but its completion will trigger the relocation of several clinics out of multi-tenant buildings which will have an impact on vacancy in the coming quarters.  Third quarter activity, however, did not yet reflect that anticipated movement.  New leases and expansions signed among competitive medical buildings in the third quarter generated 31,748 square feet of positive net absorption which raised the year-to-date total to 81,339 square feet.  The positive gain improved the citywide vacancy rate to 18.0% compared to 18.6% last quarter.  Vacancy is up, however, compared to 16.3% recorded in the same quarter last year due to the addition of new inventory, including Lexington Plaza (33,431 sf) and Villa Rosa Medical Plaza (70,161 sf).

The citywide average quoted rental rate for medical office space showed signs of flattening with an increase of only one cent from last quarter to reach $21.77 per square foot annually on a full-service basis.  The healthy over-the-year gain of ninety-five cents or 4.6% reflects the impact of new, higher-priced product.  Strength and stability for the healthcare industry has led to more construction in the two emerging medical hubs – Far West and Far North Central.  1234 Westover Hills (95,000 sf) is now underway and 18707 Hardy Oak (113,786 sf) is nearing a scheduled completion date of January 2010.

Read San Antonio’s medical real estate market slow but steady, study shows, San Antonio Business Journal (12-11-09)

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